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Can someone breakdown how these work, I was looking at homes condos ect with my Father in HI and we were trying to figure out the craziness. I'm really looking for a cliff notes version for a couple dummies. It's like you can buy a house but you don't own the land it's on. It's kinda perplexing.
Also, my Dad's been to Hawaii like 10 times, I was there once (twice if you count when my Mom was pregnant :P). I prefer hiking around Diamond Head, exploring the North shore ect. We spoke to some locals including a real nice city worker who was waiting for his buddy and had a beer with my Dad in the back of his pickup. Everyone I met except for a guy in an outrigger who was a dick was pretty awesome. Do locals really hate main landers, I hear there's some real prejudice. I can understand why socially hell I wrote a paper on exploiting pacific islander culture in University. But have things become harder there? It seemed like poverty and drugs were becoming more of a problem. By drugs I mean like meth/crack not pot.
1). You can't buy a house that you don't own the land. You lease it. Much like a car. At the end - either the lease is renewed or you give up the house.
2). Given we are on our 6th year of record tourism- the notion everyone here hates tourists is rather silly - a majority of residents rely on tourism in some manner.
3). Hawaii has a serious meth issue for over 20 years - therefore it isn't becoming a problem it's been a problem for some time.
There are less and less leasehold properties, it used to be that almost all houses were leasehold but that was a few decades ago.
Leasehold isn't as desirable as fee simple because at the end of the lease, you don't know if they are going to raise the monthly lease amount or not even renew the lease at all. If they don't renew the lease, you don't really lose the house, you just have to move it. Which ain't cheap and then you gotta have someplace else to put the house, too. So unless someone is at the start of a fifty year lease, most folks shy away from leasehold and rightfully so.
Not sure how it works with condos, I don't track those at all. I've never liked monthly maintenance costs that are determined by someone else.
Buying a house is out of reach for many island people, especially the ones on Oahu. The costs of living in Hawaii are so high and taxes are so pervasive that if you're born and raised here or moved here at an early age, most likely you'll not be able to save up enough for a down payment on any of the exceptionally expensive pieces of property. Even small junky houses or condos are about five times more expensive than some of their mainland counterparts. There just aren't a lot of the lower end and starter units available. In many places on the mainland, there's options for buying a small apartment, half a duplex, a trailer or some less expensive place to start so you get equity to work up to a more expensive house. Here, you pretty much have to start out at the high end and most local families can't afford it so they rent forever. I know a few living 'homeless' on the beach by choice since the cost of housing puts too much strain on their finances.
Start out with this scenario and then add in some 'rich' folks who have mainland money and move over and buy up some of the few housing units available. That puts pressure on housing prices and it's definitely not a downward pressure. If Hawaii were to make it a requirement that folks who bought houses in Hawaii either lived in them, or at least lived in Hawaii or paid an extreme non-resident tax, that might take some of the pressure off rising prices, but they won't do that because then the price of houses would drop and everyone with property would howl. Since people with property have a tendency to be the ones making the laws, well, there ya go.
Most folks in Hawaii like tourists. Tourists are great, they're happy - although sometimes they think they are entitled to whatever it is they want since 'they paid a lot to be here' as if the ongoing costs paid by residents doesn't matter, but for the most part they're a pretty happy bunch of customers to work with. They spend money, they provide jobs (although most of the jobs are low income service jobs and a big portion of the tourist money goes directly off our island shores to the mainland or foreign companies that own the hotels) and even if the tourists are annoying, they will leave soon.
However, as soon as they stop being tourists and want to move over here, then things change. All of a sudden, there's someone else eating out of the same food dish that we all are. Does this new person know about island ways? Do they know about getting along? Do they know about sharing their abundance? Do they know about helping others? Are they going to be helpful or are they going to be pitiful and need to be rescued all the time? Are they going to stick around? Once they step out of the 'hi, I'm a visitor' box and into the 'hi, I want to use some of your limited resources' box, well, then things are different.
Its simple:
Fee simple - means house and land
Lease - means you purchase the home/condo but rent the land as someone else owns the land.
Condo docs - is a term used when you share property with someone else, usually for a shared driveway.
If your lease expires and the owner doesn't renew a contract with you, you can get kicked off and have to, somehow, take your home/condo away and have to look for another parcel to either lease again or purchase to put your home/condo on.
Thanks, when looking we were seeing a ton of land lease units and it sort of boggled my mind. Just the idea of building a house on land you don't own. I've lived in both Canada and the US (mainland) and I've only seen this in Hawaii. So "Fee simple" is what I should be looking at.
My Father was looking at these condos you purchase (Sort of) they remind me of timeshares except you can spend more time there. But other people rent them for the rest of the year. Hopefully you can have them filled up. To me it sounds kinda risky seeing as your on the hook to still pay for them even if tourists aren't filling the units. The units are maintained by the hotel, or whomever you purchased them through.
Which cities/islands are the best to live/ raise a family? Is there anywhere "affordable" that is safe with good schools?
Any word if Trader Joes is ever going to open up there?
For some people, leasehold properties make sense. This is especially true given that many people aren't sticking around in a home for more than 5-10 years before getting up and moving elsewhere; in that sense, the lower price that you're paying for a leasehold vs. a fee simple property can be a huge relief and make otherwise un-affordable properties affordable. But, for me, as attractive, price-wise, that leasehold properties are, I never seriously considered one when searching for a condo to buy here on Oahu (just made an offer on a property today). Simply put, I wouldn't feel as "secure" in a leasehold vs. a fee simple property.
Moving on, I haven't interacted with too many locals here, but those that I have interacted with have been very friendly (but I'm an easy guy to get along with as well). If I come across anyone who isn't friendly to me, I'm sure it won't bother me . . . they aren't paying my rent, salary, etc., so why would their dislike of me affect me in any way?
Which cities/islands are the best to live/ raise a family? Is there anywhere "affordable" that is safe with good schools?
Any word if Trader Joes is ever going to open up there?
"Affordable" is hard to define. Oahu has the majority of the jobs, but the cost of housing there is out of sight. Big Island has the lowest housing costs, but jobs are much harder to find and are centered mostly in Kona or Hilo. Where I live the houses are very reasonably priced, but it's an hour and a half to jobs in Kona.
What kind of work are you looking for?
"Best" places to raise a family and quality of schools have been discussed at length on this forum. Do you know how to do a forum search?
Leasehold definitely makes sense for a lot of people.
Let's take the Waikiki Landmark - a 2 bedroom can be had for $250,000 or less (versus nearly $900,000) for fee simple. That's $500/month over the life of the lease.
It has 40 years left on the lease at $1,600/month. So for someone who plans to hold the unit over the life of the lease is only paying $2,100/month + monthly condo fees (which everyone pays anyway).
Leasehold definitely makes sense for a lot of people.
Let's take the Waikiki Landmark - a 2 bedroom can be had for $250,000 or less (versus nearly $900,000) for fee simple. That's $500/month over the life of the lease.
It has 40 years left on the lease at $1,600/month. So for someone who plans to hold the unit over the life of the lease is only paying $2,100/month + monthly condo fees (which everyone pays anyway).
Even in the Waikiki Landmark where the cost disparity between owning (fee simple) vs leasing (leasehold) is so significant, renting still makes much more sense.
Rent - $3,300 (per CL)
If you "own" leasehold -
$1,300 maintenance fee
$200 RPT
$1,600 lease rent
$1,000 mortgage (based on 20% down)
$200 mo interior unit maintenance
Total monthly cost to "own" leasehold - $4,300
That's a $1,000/mo savings by renting vs owning leasehold.
The craziest part is that these Waikiki Landmark LH owners can give their units away for FREE and the new LH owner would not be able to cash flow a penny with these units. That's straight bananas.
Also note that the one unit currently listed for $218K LH sold for $460K LH in 2006. And then sold for $190K LH in 2013. That's a $270K drop in unit value (60% plunge in just 7 years). Ouch. Timing can be particularly crucial with leasehold buys... lease rent renegotiations can devastate values overnight.
Deals can be had in LH purchases but buyers must be very sophisticated. The average person is going to get burned buying LH.
Outside of the leasehold argument, I can't imagine anyone plunking down $600K MORE just to own the land in fee in the Waikiki Landmark. You would be over $2,500/mo negative on these condos. Who on earth are buying these things?
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